Vedanta to exclude base metals business from sweeping demerger
The group said it will consider the base metals business demerger at a later stage.
A shock announcement by Panama to intervene in a privately run copper mine may not be as definitive as first thought.
First Quantum Minerals Ltd. continues to mine the massive Cobre Panama open-pit despite a government order to close commercial operations after talks for a new tax arrangement collapsed, people with knowledge of the situation said.
In addition, the administration of President Laurentino Cortizo hasn’t closed the door to a resumption of talks, they said, asking not to be named discussing private information.
That’s a less black and white picture than earlier in the week when Cortizo declared negotiations over and instructed the Commerce Ministry to put the mine on care and maintenance. The government was also said to be seeking another operator to replace Vancouver-based First Quantum.
The wiggle room appears to be in the fact that halting the mine requires a resolution to rescind contracts, potentially giving the two sides a window of time to reach a deal.
The collapse in talks caught investors by surprise given how much is at stake for both sides if the operation is seized.
The mine, which cost at least $10 billion to build, is by far First Quantum’s biggest asset as well as an economic engine for the country. Ripping up contracts would be a hammer blow to the company and to Panama’s investor-friendly reputation, as well as potentially setting off a massive legal case.
Earlier Friday, the company signaled it hadn’t given up hope after coming “very close to an agreement” before the government pulled the plug. On the same day, Cortizo said that while everything had been suspended, “we can’t discard anything for obvious reasons.”
(By James Attwood and Yvonne Yue Li, with assistance from Michael McDonald)
2 Comments
Thomas Scott
About time these countries started asking for more,farer
Clinton Davis
@Thomas Scott, it is fine for countries to ask for more initially, but to renege on an agreement that led to huge, long term investment is disingenuous. To an activist mindset it may be ‘sticking it to the man’, but the reality is different. The huge companies that can pull together these enormous projects do so with the money of many small people. There may be big names like Blackrock, Vanguard, First Quantum or Glencore, but the money they have is from little institutional investors represented by their savings and pension funds. With Panama making mining a toxic investment, rather than more ‘fairer’ deals, there will be fewer deals at all. Those that there are will be based on quick returns and not the sort of long-term investment that is good for the people of developing nations. Would Panama ever had that initial canal built if it had not been for people with a long-term vision and confidence that it would be worth it in the end? No. It is also worth noting that currently the Panama Canal Authority has a better credit rating than the Panama government. Why is that I wonder? Take a look at the investors in the canal’s expansion project and you will see it is money from little people around the world that gets lumped together in long-term finance vehicles. They trust the PAC (Panama Canal Authority), but not so much the Panama government. How is that ever going to lead to fairer deals for the average Panamanian?